Jason Rice

To continue from my last posting talking about getting back to the basics, here are some benchmarks to be looking at:
Now would be the time to strengthen the Internet department to make sure you are taking advantage of every single opportunity that you have.
There needs to be a commitment from the top to make this work. You need to know what approaches that you want to make toward the internet, what bench marks you need to set and achieve, and not just in sales but in service, parts, and F&I.
A good internal process for sales would be to track every lead, every appointment, every show, every sold, every “up” that is generated by the Internet. And use the report to manage on the items that are successes and failures..

Here are some good attainable goals for sales. First, most dealerships leads come from 50% third party, 30% dealership site, and 20% OEM. One goal would be to reverse the third party percentage to 30% and the dealership to 50%. One way to do this is to put more attention and resources to SEM and SEO. Next make sure you are spending no more then $25 per lead and $250 cost per sale. And then make sure your internet department is generating 20-50% of the dealerships business (the big gap has a lot to do with franchise and market). The internet managers should be shooting for 50% appointment from leads, 50% show, and 50% delivered. These goals should be changed once you establish a 3 month average. Work (meaning phone calls and follow up emails) for at least 60 days, then send them broadcast emails until they tell you to stop.
At the end of each month you want to review each Internet sales manager and each lead provider by what they generated. For Internet Sales Managers let’s look at a rolling 3 months percentage of leads to appointments if their average is at 32% then we want to make next months goal to be 37%. Same increase goes for showed and sold.
When it comes to lead providers, take a look at your over all average cost to sell, and as a reminder, make sure it is under $250 or your last 3 month average. You are going to have some lead providers that have a $250 cost per sale but some that have a $500 cost per sale. You must also be tracking their average appointments, show and sold. Just based on those numbers alone won’t tell you that one is better then the other. Before you cancel a lead provider, you want to look at the over all performance of that provider. For an example, let’s say ABC.com’s average cost per sale is only $250 but it provided 75 leads with only 10 appointments, 6 showed and 2 delivered and for a total of $500 a month. Plus the average gross profit of those leads is $200 less then your average internet gross. ABC.com closing percentage is 3%. It’s average cost per sale is in line but it is taking up a lot of man power to follow up with the lead and is driving down your cost per sale and average closing percentage. ($1300 average gross X 2=$2600)
But XYZ.com’s average cost per sale is $300 and it only generated 50 leads, 28 appointments, 15 showed and 10 delivered for a total of $2400 a month. The average gross profit on these deals are the same as the overall departments gross. XYZ.com has a closing percentage of 20%. It is above your goal of $250 cost per sale and almost double your cost per lead, but has a good closing percentage. ($1500 average gross X 10=$15000)
Now which one would you cancel? By canceling ABC.com you can take that additional $500, put it toward XYZ.com, get 10 more leads and 2 more deals at a $1500 average for an additional $3000 gross, which will out perform the cheaper lead.

Again, now is the time to take advantage of the internet and every opportunity you have, and every lead or phone call you get from the internet. Get as many qualified leads that you can afford and work each one until they buy, die or unsubscribe.

Dealerships should always try to stay ahead of the guy down the street. Thinking “out side the box” to gain market share. And there is a lot of talk about the next big thing that they want to do, video, video search engine marketing, blogs, SEM, SEO…..

But through a lot research and process building at dealerships across the nation, I think the first big hurdle would be to make sure you have a strong process and process management in place before going for the “next big thing”. Build the foundation first, make sure it is solid, then frame, dry wall, paint….. but  alot of times we try to go right to the painting first (because that is what everyone else is doing) in hopes it would bring a solid foundation that has been lacking from the beginning.

I started doing Internet sales in 1997 and all we really could do then was to focus on building and managing a process. We had 3rd party leads fighting for our business, but other then that, all we had to focus on was our process. Now there are so many other things that have to be managed to have a successful Internet department, or better yet, a better dealership, that we lose focus on what will get us to the next level. I have seen, and been apart of the dealerships retreat from the Internet in the late 90’s and the hesitancy of dealerships trying to get back into the Internet in the early 2000’s. This retreat and hesitancy was brought on by the lack of process management and spending money on leads that didn’t produce sales because of it. I know that there are good and bad lead providers, but a big percentage of the dealerships failure had to do with how the lead was handled. 

Going for the “next big thing” is what you should strive to do if it makes sense, but I would challange you first to make sure you have your website in order, a lead management tool in place with a process that contacts the customer for at least 60 days, closing at least 10% of your leads and doing 25-40% of your dealerships business. You must also have effective marketing and pricing on your used vehicles (asking too much for a car with bad discription and bad photos is not going to give you a good ROI on Autotrader, cars.com,….so don’t worry about videos until that is handled).

Lets move back in time, focus on what will get the customers to feel obligated to do business with you, and put the blinders on until you have reached your tipping point.